Thousands of Japanese diners could not tell the difference. Even inspectors for Michelin Guide, which awards its highly-coveted stars to only a select few restaurants, were apparently duped.

There have been red faces across Japan since Osaka-based Hankyu Hanshin Hotels (HHH) admitted last month that eight directly-managed hotels in Osaka, Tokyo, Kyoto and Hyogo prefecture had been serving sub-par food for years.

Hankyu, which also runs a profitable railway, department store and the all-women Takarazuka Revue, is a respected brand name in western Japan. Hanshin, which has similar operations, merged with Hankyu in 2006 for synergy reasons.

Even the five-star Ritz Carlton Osaka, which shares the same holding company as HHH, has admitted to menu “mislabelling” at its Michelin one-star Chinese eatery.

The latest scandal surfaced just weeks after Tokyo clinched the right to host the 2020 Olympic Games by promising, among other things, classic Japanese “omotenashi” (hospitality) to all visitors to Japan.

“Do not bring disgrace to Japanese omotenashi,” Osaka-based Mainichi Shimbun daily said in an angry editorial.

To the man in the street, what went on at the Hankyu Hanshin hotels was pure deception. Menus at a total of 23 restaurants and banquet facilities at the hotels had promised quality ingredients.

But in as many as 47 menu items, cooks used cheaper substitutes on the sly.

For instance, instead of “fresh fish” done a la meuniere – a method in which the fish is dredged in milk and flour and then pan-fried with butter – thawed, frozen fish was used.

And instead of getting “Shinshu soba” from Nagano prefecture, well-known for its high-quality buckwheat noodles, diners were served soba made in China.

At Ritz Carlton Osaka, a cheaper type of prawns was passed off as expensive “kuruma ebi” (black tiger prawn) at its Chinese restaurant, with Michelin inspectors apparently none the wiser.

Hotel management claims the mislabelling was the result of poor communication between kitchen staff and those who drafted the menus, and insisted that there was never any intention to deceive customers.

HHH said it would refund an estimated 80,000 customers who had been served mislabelled items even if they cannot produce receipts.

An irate customer reportedly called the company and said he had eaten “omuraisu” (ketchup-flavoured rice wrapped in an omelette) 50 times at its restaurants and

demanded his money back. So far, HHH has refunded some 20 million yen (US$201,304) to more than 10,000 customers.

So much bad publicity was generated that HHH president Hiroshi Desaki finally had to call it quits on October 28.

At a press conference, he maintained to the end that his company was in the clear but agreed that customers could not possibly empathise with its operational problems.

“All it means is that we have betrayed our customers. The problem has gone beyond merely erroneous menu descriptions. It can’t be helped if we are told it is deception,” said Desaki.

The mislabelling of menu items at the Hankyu Hanshin hotels started in March 2006.

The following year saw the dramatic collapse of the Senba Kitcho Japanese restaurant in Osaka after it was found to have falsified the origin of foodstuffs and had even recycled leftover food, posing both hygienic and moral issues.

Strangely, the Hankyu Hanshin hotels did not learn from the Senba Kitcho scandal.

Asked why it finally decided to go public last month, HHH said it started internal investigations after learning in June that other hotels were having problems with their menus and decided to own up quickly to minimise fall-out.

Things would arguably have been worse for the company if it had chosen to stay mum and got exposed by a whistle-blower.

The Hankyu Hanshin hotels were apparently victims of fierce competition. Several years ago, many hotels sought to lure customers by promising high quality ingredients in their menus.

But amid Japan's chronic deflation and with consumers earning less in general, hotels were unable to charge higher prices.

Their solution was apparently to cut costs by using cheaper substitutes for ingredients and hope no one would find out.

The Consumer Affairs Agency is taking a wait-and-see attitude in the HHH case, as the company has apparently broken no rules. Restaurant menus are not regulated by the government.

However, the scandal has prompted other hoteliers to do a quick check on their food and beverage services.

Early this week, two other hotels, one in Sapporo, Hokkaido prefecture, and the other in Otsu, Shiga prefecture, confessed to what amounted to only minor flaws in their menus.

The Otsu Prince Hotel, for instance, apologised for serving low-fat milk at its breakfast buffet that was found to contain 2 per cent fat. The maximum permitted level is 1.5 per cent.

But the number of offending hotels surged later in the week with disclosures by hotels in Tokushima and Ehime prefectures in the west of Japan to Shizuoka and Tochigi prefectures in the east.

The Osaka-based Kintetsu Hotel Systems owned up to menu errors similar to those committed by HHL at seven of its hotels, including Westin Miyako in Kyoto and Sheraton Miyako in Tokyo.

Even the prestigious Imperial Hotel admitted to once passing off frozen orange concentrate as “fresh” juice at its Tokyo and Osaka hotels but stressed it has stopped the practice since May 2006.

Other hotels that have confessed also say they have already cleaned up their acts.

There are about 9,630 hotels in Japan altogether.

While some more are likely to come forward in the coming weeks, most, I suspect, will quietly go over their menus and remove mislabelled items, if any.

With Japan banking on a huge increase in visitors in the run-up to the 2020 Olympics, the country can ill afford to lose its lustre at this point in the game.